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News and Information Article
OKLAHOMA CITY, May 9 /-FirstCall/ -- GMX RESOURCES INC.
(Nasdaq: GMXR); (http://www.gmxresources.com ); GMXR announces the
Companys results for the quarter ended March 31, 2006. "Our first quarter
results were a net income of $2,134,327 compared to $604,524 for the first
quarter of 2005, an increase of 253%. The increase in net income was
principally due to a 112% increase in production volumes, a 21% increase in
oil and gas prices, and a 26% decrease of lease operations expense per
MCFE. This increase in production resulted from continued successful
drilling in our Cotton Valley Sand ("CVS") Resource Play on the Sabine
Uplift," stated Ken L. Kenworthy, Executive Vice President of GMXR. "GMXR
and its joint venture partner continue to have 100% success in drilling and
completing wells in our North Carthage, East Texas properties," stated Mr.
Kenworthy.
Revenues for the first quarter were $6,715,890 compared to $2,617,680
in the first quarter of 2005, an increase of 157%. Net income per share was
20 cents per basic share and 19 cents per diluted share in the first
quarter 2006 compared to 7 cents per basic and diluted share in the first
quarter 2005, a 185% increase per basic share. For the purposes of
computing the income per basic share in 2006, the Company had 10,812,264
weighted average common shares outstanding and 11,013,520 weighted average
common shares outstanding diluted. In 2005, the Company had 8,120,307 basic
and 8,223,621 diluted weighted average common shares outstanding.
The increase in revenues in the first quarter 2006 versus 2005 was
$4,098,210. Increases in expenses were (a) lease operations $254,841, an
actual decrease of 26% per MCFE, which was 82 cents in 2006 compared to
$1.11 in 2005, resulting from newer wells and cost reductions, (b)
depreciation, depletion and amortization increased $795,441 due to
increased volumes, and (c) all other expenses increased from $827,839 in
2005 to $1,700,487 in 2006 due to increased volumes and additional
personnel costs.
2006 Production Guidance:
Actual Actual Guidance Guidance
1Q2005 1Q2006 2Q2006 Year2006
Production BCFE .404 .857 1.2 5.0-6.0
Operational and Joint Development Update:
1Q 2006 Summary Cotton Valley Resource Development All Areas
During the quarter 13 gross/6.6 net wells were drilled in our North
Carthage development, compared to 3 gross/0.8 net wells 1Q05. Net
production more than doubled 1Q05, as we averaged 9.5 mmcfe/d. Four Cotton
Valley rigs were drilling in the resource play, two were operated by GMXR
(one shared) and two were operated by Penn Virginia Oil & Gas, L.P.
("PVOG"), a subsidiary of Penn Virginia Corporation (NYSE: PVA), our joint
venture partner. Six of the wells were completed in the Taylor Sand, five
of the wells were drilled into the Lower Cotton Valley, where extensive
research and tests were conducted.
Rig #7 (Diamond Blue Drilling Co.; wholly owned sub of GMXR) drilled
its second well to 10,000 feet, in less than 17 days.
2006 Update and Planned Activity
Rig #7 drilled its 3rd well to 9,900 feet in less than 15 days,
eventually reaching total depth of 10,500 on day 17. Rig #11 (Diamond Blue
Drilling Co.; wholly owned sub of GMXR) construction is on time for arrival
in the second quarter. The rig should be capable of drilling to 14,000
feet. In preparation for this rig, acceleration of operations and expansion
we have added several personnel to both Oklahoma City, Oklahoma and
Marshall, Texas offices. We are scheduling ten fracture treatments in our
last three wells over the next thirty days. The plan is to complete one
zone per week in each well. Two wells will have four zones fracture treated
and two zones in the other well. Eight wells have been drilled into the
Lower Cotton Valley to date and further deeper drilling is planned. Several
wells have been completed in the UCVS with very good results and additional
2nd and 3rd stage completions in existing CVS producers are ongoing. We are
currently producing 10.5 mmcfe/d net in the field. To date we have laid in
excess of 74 miles of pipelines for gathering, sales, gas injection and
water disposal. We continue to acquire leases in all Areas, in all
directions and will continue to investigate deeper targets, as well as
Travis Peak/Pettit and Glen Rose development this year.
Teleconference call and webcast:
GMX RESOURCES INC. will discuss its first quarter 2006 earnings and
operational update in a conference call followed by a question and answer
session on Wednesday May 10, 2006 at 12:00 p.m. Central time. You can
participate via telephone by dialing 1-800-362-0595 and referring to
conference ID "GMX" five to ten minutes before the scheduled start of the
conference call. You can also access the conference call via Internet
webcast by logging on to the Companys website at
http://www.gmxresources.com at least 20 minutes prior to the scheduled
start of the call to download and install any necessary audio software. You
can find the Internet webcast link under the Investor Relations tab where
you will be required to register your name and email address. You must have
either Microsoft Media Player or Real Player to access the conference call.
During the conference call periodically the companys most recent
presentation, on its website will be utilized. An on- demand replay of the
teleconference call will be available until May 16, 2006 by calling
800-283-4605 referring to conference ID "GMX" and the web-cast will be
available on GMXRs website for 30 days.
GMX RESOURCES INC. is a rapidly growing independent E & P company. Key
Gas Resource Play in Cotton Valley Sands, Travis Peak Sands & Pettit Limes;
North Carthage Field, East Texas, Panola & Harrison County; "Tight Gas
Sands" on the Sabine Uplift; 93% Natural Gas; Core Area: 99% of NAV;
Stacked Multiple Reservoirs; Drilled 67 CVS Wells, 5 Travis Peak Wells
since inception in 1998; 26,853 gross / 15,948 net acres; 619 gross / 374
net CVS 40 acre locations; 7 Yrs of Development with 6 Rigs. Headquartered
in Oklahoma City, Oklahoma, GMXR has interests in 111 gross/65.83net
producing wells and operates 67% of its reserves. YTD price range $50.50 -
$28.65; Average Daily Volume 90 days - 340,000 shares; Common Stock
Outstanding - 11,207,467 shares; Institutional Ownership approximately 60%
at December 31, 2005; Management maintains 22% equity stake. The Companys
strategy is to develop its resource play with multiple rigs, increase
production, grow its natural gas reserves and continue to build shareholder
value.
This press release includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, as amended. All statements, other than statements of historical
facts, included in this press release that address activities, events or
developments that the company expects, believes or anticipates will or may
occur in the future are forward-looking statements. They include statements
regarding the companys financing plans and objectives, drilling plans and
objectives, related exploration and development costs, number and location
of planned wells, reserve estimates and values, statements regarding the
quality of the companys properties and potential reserve and production
levels. These statements are based on certain assumptions and analysis made
by the company in light of its experience and perception of historical
trends, current conditions, expected future developments, and other factors
it believes appropriate in the circumstances, including the assumption that
there will be no material change in the operating environment for the
companys properties. Such statements are subject to a number of risks,
including but not limited to commodity price risks, drilling and production
risks, risks relating to the companys ability to obtain financing for its
planned activities, risks related to weather and unforeseen events,
governmental regulatory risks and other risks, many of which are beyond the
control of the company. Reference is made to the companys reports filed
with the Securities and Exchange Commission for a more detailed disclosure
of the risks. For all these reasons, actual results or developments may
differ materially from those projected in the forward-looking statements.
GMX Resources Inc. and Subsidiaries
Consolidated Balance Sheet
As of December 31, 2005 and March 31, 2006 (Unaudited)
December 31, March 31,
2005 2006
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $2,392,497 1,532,557
Accounts receivable--interest owners 74,971 52,859
Accounts receivable--oil and gas revenues 4,188,451 3,243,090
Inventories 247,364 602,494
Prepaid expenses 10,028 299,689
Total current assets 6,913,311 5,730,689
OIL AND GAS PROPERTIES, AT COST, BASED ON THE
FULL COST METHOD OF
ACCOUNTING FOR OIL AND GAS PROPERTIES 68,920,264 85,723,918
Less accumulated depreciation, depletion, and
amortization (9,992,867) (11,303,120)
58,927,397 74,420,798
OTHER PROPERTY AND EQUIPMENT 17,044,734 22,603,511
Less accumulated depreciation (1,793,781) (2,243,062)
15,250,953 20,360,449
OTHER ASSETS 11,610 11,609
TOTAL ASSETS $81,103,271 100,523,545
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $7,809,387 10,753,652
Accrued expenses 419,130 287,020
Accrued interest 25,430 ---
Revenue distributions payable 317,232 317,647
Short Term loan 5,100,000 ---
Current portion of long-term debt 345,967 322,337
Total current liabilities 14,017,146 11,680,656
LONG-TERM DEBT, LESS CURRENT PORTION 1,410,035 5,678,017
OTHER LIABILITIES
Revenue Suspended $1,026,661 1,485,852
Asset Retirement Obligation 2,212,233 2,229,880
Deferred Income Taxes 1,212,100 1,857,577
4,450,994 5,573,309
SHAREHOLDERS EQUITY
Preferred stock, par value $.01 per share,
500,000 shares authorized
Common stock, par value $.001 per
share -- authorized 50,000,000 shares;
issued and outstanding 9,975,310 shares in
2005 and 11,192,450 shares in 2006. 9,975 11,192
Additional paid-in capital 50,965,235 65,196,158
Retained earnings 10,249,886 12,384,213
Total shareholders equity 61,225,096 77,591,563
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $81,103,271 100,523,545
GMX Resources Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
2005 2006
REVENUE:
Oil and gas sales $2,614,895 $6,689,411
Interest income 2,749 26,157
Other income 36 322
Total revenue 2,617,680 6,715,890
EXPENSES:
Lease operations 448,516 703,357
Production and severance taxes 131,537 453,897
Depreciation, depletion, and amortization 736,801 1,532,242
Interest 59,744 42,373
General and administrative 636,558 1,204,217
Total expenses 2,013,156 3,936,086
Income before income taxes 604,524 2,779,804
INCOME TAX PROVISION:
Current --- ---
Deferred --- 645,477
Total Income Tax Provision --- 645,477
Net Income (Loss) $604,524 $2,134,327
EARNINGS PER SHARE - Basic $0.07 $0.20
EARNINGS PER SHARE - Diluted $0.07 $0.19
WEIGHTED AVERAGE COMMON SHARE-Basic 8,120,307 10,812,264
WEIGHTED AVERAGE COMMON SHARE-Diluted 8,223,621 11,013,520
GMX Resources Inc and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, 2005 & 2006
CASH FLOWS DUE TO OPERATING ACTIVITIES
Net Income $ 604,524 $ 2,134,327
Adjustments to reconcile net income
to net cash provided by (used in) operating
activities
Depreciation, depletion, and amortization 736,801 1,532,242
Deferred income taxes --- 645,477
Other Non Cash Changes to Net Earnings --- 155,067
Amortization of loan fees 17,348 ---
Decrease (increase) in:
Accounts receivable 120,385 967,473
Inventory and prepaid expenses (3,174) (644,791)
Increase (decrease) in:
Accounts payable 87,649 2,944,265
Accrued expenses and liabilities 101,656 (157,539)
Revenue distributions payable 24,609 459,606
Net cash provided by (used in)
operating activities 1,689,798 8,036,127
CASH FLOWS DUE TO INVESTING ACTIVITIES
Additions to oil and gas properties (3,414,076) (16,549,715)
Purchase of property and equipment (193,674) (5,558,777)
Net cash provided by (used in)
financing activities (3,607,750) (22,108,492)
CASH FLOWS DUE TO FINANCING ACTIVITIES
Advance on borrowings 2,046,693 9,298,955
Payments on debt (256,203) (10,154,603)
Proceeds from sale of stock 77,026 14,077,073
Net cash provided by (used in)
financing activities 1,867,516 13,221,425
NET INCREASE (DECREASE) IN CASH (50,436) (859,940)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 862,546 2,392,497
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 812,110 $ 1,532,557
CASH PAID FOR INTEREST $ 42,395 $ 67,803
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